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An Indian-origin hedge fund portfolio manager has been found guilty by a federal jury here on charges that he participated in one of the "most lucrative" insider trading schemes totalling USD 276 million involving information about clinical trials for an Alzheimer's drug.
Mathew Martoma, 39 was convicted on one count of conspiracy to commit securities fraud and two counts of securities fraud.
Following the conviction, Manhattan US Attorney Preet Bharara said in a statement that Martoma cultivated and purchased the confidence of doctors with secret knowledge of an experimental Alzheimer's drug, and used it to engage in illegal insider trading.
"Martoma bought the answer sheet before the exam - more than once - netting a quarter billion dollars in profits and losses avoided for SAC, as well as a USD 9 million bonus for him. In the short run, cheating may have been profitable for Martoma, but in the end, it made him a convicted felon, and likely will result in the forfeiture of his illegal windfall and the loss of his liberty," Bharara said in a statement.
Martoma becomes the 79th person convicted of insider trading after trial or by guilty plea for charges brought by Bharara¿s office in the last four years.
His lawyer Richard Strassberg said after the verdict that, "We¿re very disappointed and we plan to appeal."
The case is brought by Bharara, who has alleged in the criminal compliant that Martoma exploited his personal and financial relations with a leading doctor Sidney Gilman to make profits and avoid losses for SAC in an amount totalling approximately USD 276 million.
Gilman, who chaired the Safety Monitoring Committee (SMC) for the clinical trial, testified for the government that he gave Martoma an advance look at the final results weeks before they were made public.
Martoma is the son of Indian immigrants and faces as many as 20 years in prison on the securities fraud charges and five years on the conspiracy charge if convicted.
He was arrested in November 2012 from his home in Boca Raton, Florida and has been free on a five million dollar bail.
In their closing arguments, prosecutors said Martoma pursued a "canary in a coal mine" to give him an "illegal sneak preview" of the results of the clinical Alzheimer¿s drug trial. They said he built and harboured relationships with two doctors, including 81-year old Gilman.
Prosecutors said Martoma's relationships with the